Famously, Keynes (1936, pp. 161–62) thought that capitalist investment is impelled by irrational “animal spirits,” by which he meant a “spontaneous optimism,” and an irrational “urge to action rather than inaction.”12 The crucial role Keynes attributed to animal spirits followed from his belief that consumption is governed by habits that are slow to change. As he put it; “a man’s habitual standard of life usually has first claim on his income, and he is apt to save the diference which discovers itself between his actual income and the expense of his habitual standard” (p. 97). The natural sluggishness of consumer demand, according to Keynes, makes the important variable in determining macroeconomic stability the degree to which capitalists feel inspired by irrational spirits to invest the diference between national income and national consumption. But clearly investment decisions in industrial capitalism are also made on a rational, inductive basis. For capitalists have good empirical grounds for believing that consumers will tend to be responsive to increases in output simply because since the inception of capitalist mass production, aggregate demand has tended to keep pace with increasing output.13
The willingness of capitalists to invest in industrial facilities and equipment has, then, depended not just on blind optimism, but also on what has been a quite consistent tendency for consumption to expand to absorb production. The inductive grounds on which investments are made are surely, on balance, more important to the ongoing stability of capitalism than the eruptions of exuberance Keynes had in mind. Yet it is unclear why, once afluent conditions prevail, aggregate demand should be, on the whole, strong enough to encourage investment (thereby facilitating the expansionary impulses of the system of production). Why, in Keynesian terms, should the propensity to consume be such as to facilitate the conversion of increases in productivity into increases in aggregate output? After all, Keynes himself, in his 1930 essay, argued that it is common sense that at some level of productivity, material demand would be sated, and the economy would come to rest in a stationary state. In fact, the actual historical dynamism of consumer demand, its responsiveness to increasing output under capitalism, goes against Keynes’s assumptions about the habitual constraints and rational limits on consumption. It was only because under capitalism “man’s habitual standard of life” had become curiously dynamic and open-ended that capitalists came to feel confident about risking their capital in productive investments. Keynes’s theory thus leaves out a crucial, demand-side element in the workings of industrial capitalism.
A Theory of Mass Consumption as Wage-Labor Commensuration
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